USD/CAD Forecast: Canadian dollar steady, investors eye U.S. consumer confidence

USD/CAD is showing little movement in the Friday session. Currently, the pair is trading at 1.3282, down 0.08% on the day. On the release front, Canadian foreign securities purchases are expected to drop to C$7.6 billion. In the U.S., the Empire State Manufacturing Index is expected to rise to 7.1 and UoM consumer sentiment is projected to climb to 93.3 points.

Recent Canadian numbers have been mixed. The economy created 66.8 thousand jobs in January, crushing the forecast of 6.5 thousand. However, manufacturing sales has recorded declines of 1.3% in December and 1.4% in November. The manufacturing sector has sputtered, as the global trade war has lessened the demand for Canadian exports. As well, low oil prices are weighing on the economy and on the Canadian dollar. The currency has slipped 1.2% in February. The Bank of Canada is unlikely to raise rates at the March 6 meeting, but there is room for rate hikes later in the year if economic growth improves.

In the U.S., consumer data has been dismal in January. Retail sales and core retail sales showed sharp contraction, and these numbers came on the heels of soft inflation indicators. Inflation remains low, despite a solid U.S. economy and strong labor market. CPI showed no change in January, and has failed to post a gain since November. Core CPI has recorded weak gains of 0.2% for four successive months. On an annualized basis, CPI gained 1.6% in January, the weakest year-over-year gain since mid-2017. The soft inflation numbers were a result of low energy prices, which fell 3.1% in January as oil prices remain under pressure.

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USD/CAD Fundamentals

• 8:30 Canadian Foreign Securities Purchases. Estimate 7.6B

• 8:30 US Empire State Manufacturing Index. Estimate 7.1

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 93.3

Open: 1.3296 High: 1.3313 Low: 1.3278 Close: 1.3284

USD/CAD Technical

USD/CAD posted small gains in the Asian session but retracted in European trade

• 1.3200 is providing support

• 1.3290 was tested earlier in resistance. It is a weak line

• Current range: 1.3200 to 1.3290

Further levels in both directions:

• Below: 1.3200, 1.3125 and 1.3049

• Above: 1.3290, 1.3383, 1.3445 and 1.3547